Operating Synergy Consists of Economies of Scale and Scope

question 33

True/False

Operating synergy consists of economies of scale and scope. Economies of scale refer to the spreading of variable costs over increasing production levels, while economies of scope refer to the use of a specific asset to produce multiple related products or services.

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Definitions:

Assets

Resources with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide future benefit.

Computer Software

Computer software is a collection of data or computer instructions that tell the computer how to work, covering everything from operating systems to application programs.

Oil Company

An enterprise engaged in the exploration, extraction, refining, and selling of oil and petroleum products.